How to plan your business spending around your growth strategy

If you’re trying to find out how to plan your spending based on your growth strategy, then you are in the right place. Growth doesn’t happen by accident, but since you’re looking into how to plan your spending around your growth strategy I’m going to assume that you have already chosen what your growth strategy will be. But in most cases to successfully implement that growth strategy you are going to have to make some investments. Working out the best way to do that, based on your growth strategy, is going to mean considering a number of things, which is what I’m going to be covering in this blog post. Keep on reading to find out how to plan your business spending around your growth strategy.

 

 

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HOW TO PLAN YOUR BUSINESS SPENDING AROUND YOUR GROWTH STRATEGY

 

Below you’ll find four spending areas that you’ll need to considering for creating the budget to go along with your growth strategy. These are not in a particular order. The likelihood is you’lll go through all four and because of how they interact with each other you might then go back and make further changes until you find what feels like the right combination for your business.

 

Spending Area 1: People

 

The first area to consider when you are planning your spending for growth is around people. These people could be employees or contractors / freelancers. You need to get clear on the people power that is going to be required in order to achieve your growth goals.

There are two main questions you need to answer:
1 – How much people power do you think you need in your business?
2 – What is the skill set that is required for those people?

It is very common in a service-based business that originally it started as just one person, the business owner, and then as the business owner reaches full capacity they look at how to increase capacity.

If you find yourself in this situation, you have two main options. You can hire so that you delegate non-client delivery tasks and have more time that you can be delivering. That might mean looking at getting rid of tasks that are related to admin, operations, finance, marketing and/or sales. If you decide to go this route then when you are increasing people power by hiring you’ll have a clear idea of the tasks you want to hand over and can therefore hire based around the time and skills needed to do those tasks.

The other way you can increase your capacity is by finding other people that can deliver the same service or some of the service. For example, this is how a lot of people who start out as a solo service provider turn into an agency. Originally, they are doing all the work, but they gain more and more clients and then find other people that can also deliver.

Both options are tried-and-tested ways of growing your business, and what makes sense for your business will be down to the growth strategy you’ve chosen and personal preference (and least in the early stages).

When you’re considering hiring people for growth, the important thing is to really think about is the return on investment is. For example, if you are going down the hiring so that you can delegate specific tasks then the focus is on you hiring and being able to pay less for that task to be done that what you can make in the hour by having more time for delivering your services. Or if you go the route of hiring someone who can also deliver the service, then you’ll want to make sure there is a sufficient profit margin between what you can charge for the service and what you’ll have to pay the person who is delivering the service.

 

Spending Area 2: Tech

 

The second area to look at when planning how to spend for growth is technology. This is one that you need to consider alongside people. Sometimes you can hire a person to do something and sometimes you could invest in tech to do that tasks, or mean that task is no longer necessary. In that scenario, you’ll have to weigh up the options to decide how to proceed.

Technology is currently changing at a rapid rate and as part of any growth strategy, you should be looking at how you can be using technology to support your growth in an efficient way.

The first way you can look at technology is how it can be used to help maximise the income you are able to make. For example, a few years ago when I was just providing one-to-one services I decided that I wanted in the future to scale my business and offer one-to-many, scalable, offers. In order to do that I knew I would need to change my tech setup, and so I invested in Kartra. This meant that I would be able to sell memberships, digital courses etc. Investing in that one piece of tech supported my business growth goal of product development (If you haven’t already decided your business growth strategy check out How to choose a growth strategy for your small business – https://www.charellegriffith.com/growth-strategy-for-small-business/)

The second way of looking at your tech is by looking at the tasks that are currently being done by you or your team doing or your team and seeing whether now anything should be dealt with my tech (including AI). Somethings that needed a human to do maybe a year or two ago might not anymore due to advances in technology.

When you’re looking at investing in tech for growth, just as with investing in people for growth, you’ll want to look at the return-on-investment. How much is it going to cost the business and what will that investment enable the business to make in return. For example, with Kartra this was a no-brainer for me even though I wasn’t going to move to one-to-many straight away. By investing in the platform I was able to drastically increase the money I could make in my business by being able to have one-to-many offers, so I knew that, easily, I could make back more by having access to that software.

And don’t always assume that technology is going to be cheaper than people. Once you start to add up all of the pro versions of AI tools you might find that it is better to invest in a person. If I haven’t already made it evidently clear there is no one-size-fits-all. You are going to have to look at your growth strategy, the costs and what you expect you can make in return.

 

 

Spending Area 3: Marketing & Advertising

The third area to look at is marketing and advertising. A very popular way to grow a business is to increase marketing and advertising spend. But we live in a world where there are so many ways to market your business. Some of them rely more on people power (for example, organic social media and email marketing), whilst others will rely more on your budget (for example, social media adverts and sponsorship).

When thinking about investing in marketing for growth, you’ll need to consider paying someone so you have extra people power, paying someone who has a better skillset (and so will get better results), and having more budget to be able to spend on marketing.

As with people and tech, the focus is on return-on-investment, but in this area you are likely to have more data so that this is an informed, data-driven, decision. When you know what your conversion rate is and your average client spend then you can properly forecast what increasing your budget by X will mean for the business. This will allow you to estimate for example if you got an extra person and increased capacity by 25% how much would you spend on marketing and advertising to meant there was enough demand for that increase in capacity. Or prehaps your a one-to-one service based business that is looking to scale with one-to-many offers. You know this will mean you have a lot more clients/customers on paper, but you can properly calculate what it will cost to acquire those clients/customers.

 

 

CREATE A STRATEGIC PLAN FOR YOUR BUSINESS OVER THE NEXT YEAR – IN JUST ONE DAY! I’m the Annual Planning Queen and I specialise in helping micro service-based business owners plan for the year ahead. By booking a Strategy Day with me, I’ll ensure you have a powerful and productive annual planning experience where we consider all the major elements to ensure you can achieve your goals for the year ahead. All you have to do is secure your date, block it out in your diary and get ready to be guided through my signature annual planning framework that guarantees that, by the end of the end of our time together, you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here.

 

Spending Area 4: Training, Development and Strategic Support

 

Last, but not least, the fourth area to consider training, personal development, and strategic support. In a big business, people have to complete continued professional development (CPD), so they keep up-to-date in their area of specialism. And you need to make sure that you are a service provider, and as a CEO, are ensuring that you have sufficient budget for your growth.

There are two main aspects to consider.

1. If you are providing the service, what do you need to do in order to stay up-to-date and delivering at a high standard?

2. What do you need in terms of strategic support as the CEO of your business?

This could mean anything from you deciding to have professional memberships, having a budget for conferences and events or taking specific training courses. This can also be you joining a mastermind or working with a business coach/mentor.

Now, with all of these things, just like all the other things we’ve spoken about in this blog post, the key is to really focus on what you expect the return to be, so you can make a valid choice. What value is to the company if you deliver a better service? Will it make it easier for repeat business? Or ensure you can charge a premium rate? When investing in a business coach or mentor, you should be clear about the growth you expect to achieve in the business by working with them.

 

 

The difference between silly spending and wise investing

There is a difference between spending in your business and investing in your business. Whilst this blog post is titled ‘How to plan your business spending around your growth strategy’, this spending is in fact investing. In every scenario, you are expecting to make more than what you are originally putting in.

For example, you might be thinking, “I am going to hire someone and I’m going to be spending 1k a month, but that means that’s going to free me up, and I’ll be able to make another 3k a month”. That is an investment. If you decide “I am going to invest in a piece of tech software, and I expect to make X back,” that is an investment.

This is the difference between spending and investing. It’s not about spending for the sake of spending, but spending to increase capacity, to increase demand or to able to charge more so that your business can grow financially.

 

 

Putting it all together into a financial plan

 

After you’ve worked your way through all four areas, it is time to pull it together into a financial plan. To start you can use the data from your current year. This will give you a starting point for expected income and expenditure. And then you can add in these additional investments that you’re going to be making in the business, and the anticipated growth you expect it to make. That will help you to see overall whether the return-on-investment seems good enough to move forward with.

BE THE CEO YOUR BUSINESS NEEDS. CREATE A PLAN FOR THE YEAR AHEAD. I’m the Annual Planning Queen and I specialise in helping micro service-based business owners plan for the year ahead. By booking a Strategy Day with me, I’ll ensure you have a powerful and productive annual planning experience where we consider all the major elements to ensure you can achieve your goals for the year ahead. All you have to do is secure your date, block it out in your diary and get ready to be guided through my signature annual planning framework that guarantees that, by the end of the end of our time together, you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here.

 

 

That’s it. You now know how to budget to support your spending goals and your growth goals.

 

As you can see, there is a lot to consider and there definitely isn’t one route. The main thing to concentrate is:

How big do I want the business to grow?
What route am I committing to taking and what will that cost?
What do I expect the return-on-invesment to be?

By asking these questions, and going through the 4 areas, you’ll hopefully be able to make an informed, well-thought-through decision and then also have some clear data to be monitoring.

If you’ve found this blog post useful, please do let me know over on Instagram or LinkedIn.

 

As I’ve already mentioned,  I’m the Annual Planning Queen and have helped hundreds of business owners with annual planning. I have a proven process that means you can create your strategic plan for the year ahead in just one day. You can do it one-by-one with me, or multiple times a year I run group planning days. For all the information click here.